The 'A' word

Mark Kay says it has never been more important for directors to keep up-to-date with their asbestos duties and obligations.

There is no doubt that when it comes to asbestos, a heightened sense of public concern means it will inevitably become headline news. A prime example is the recent media coverage of the ongoing delivery and rollout of Australia’s National Broadband Network, in which Telstra came under close scrutiny surrounding its handling of asbestos by contractors. This was made all the more newsworthy because of the active involvement by the federal government and unions voicing strong concerns over allegations of mismanagement.

The spotlight is most definitely on asbestos wherever you turn, with that intensity also applying to the workers within asbestos-related fields and the person conducting a business and undertaking (PCBU), who can be an individual in an organisation.

There has never been a more important time than now for directors to remain up-to-date with asbestos obligations. This is because the law now allows a single individual to be prosecuted, along with an employer, for millions of dollars and in the worst-case scenario, to be given a prison sentence.

For the bulk of the Australian public growing up in a culture of asbestos deaths and disease, the seriousness is justified.

Most memorable for many Australians is the infamous Bernie Banton vs James Hardie court case, the media coverage of it and the mini-series Devil’s Dust to cement its legacy.

There is no denying asbestos is a legacy that remains in the fabric of our environment, in structures and within infrastructure and in places we do not even contemplate due to its massive use and application in Australia up to the 1980s.

Not widely known is that until 2004, it was still being imported into Australia. Many countries, such as Russia and China, are still mining asbestos. Indeed, Canada only halted its activities in 2011. The European Union has now completely banned all mining, sales, marketing and use of asbestos across all countries.

Statistics released by Work Safe Australia shows that “next to the UK, Australia has the highest rate of asbestos-related cancer deaths in the world”.

The Australian Mesothelioma Registry released data indicating 47 per cent of people diagnosed in 2012 had died by 2013, a total of 290.

In Europe, it is predicted that 250,000 people will die in the next 20 to 50 years from asbestos-related disease.

In 2012, Bill Shorten, then Minister for Employment and Workplace Relations, referred to it as “an insidious killer” and “a national issue requiring urgent attention and greater national preventative coordination”. This paved the way for the establishment of the national Office of Asbestos Safety in July 2013.

The harmonisation of legislation in Australia, the Work Health and Safety (WHS) Act 2011, is a giant leap forward from the “Robens-style” legislation in the 1970s and takes the international lead over countries such as the US, UK and Canada.

By creating a high-level nationally uniform and consistent WHS model, the previous confusion of differing requirements between Australian states has been eliminated.

The current legislation ups the ante on duties and accountabilities related to specific roles for the PCBU that confusingly also applies to corporations (profit or not-for-profit) and its officers.

It is important to note that the asbestos provisions form only a sub-set of the total WHS obligations, albeit an important and more prescriptive one than other WHS obligations.

For the first time there is a personal liability – individuals or officers of an organisation (that is, directors, the board or committee members and managers) can now be prosecuted as well as employers, with fines of up to $3 million and possible jail time for individuals.

The definitive question is: What are the duties and obligations of an officer? Without delving too much into the details and complexities relating to duties, WHS legislation ultimately highlights that if you sit on a committee of an organisation, as a director or as an individual who makes decisions, or participate in decision making that affects the whole or a substantial part of the organisation, you must exercise due diligence to ensure the organisation (or PCBU) complies with its WHS duties and obligations.

As its officer, you must assume a significant degree of personal liability, of which your line of defence is simply to know what is going on in your organisation in the WHS space.

You must have direct knowledge and information, and be able to verify that documented processes and safety systems are being effectively and systematically applied to protect workers and contractors.

A recent example of the need for exercising due diligence is Newcastle-based engineering giant Bradken, which potentially faces fines of up to $850,000 for breaching a ban on importing material containing asbestos.

Where there is evidence of non-compliance and a breach by the organisation and/or its officers, the insurers may not provide any cover.

Exclusions in varying forms may also exist or be embedded in policies (in particular, with strata portfolios) regarding personal injury claims for asbestos exposure.

Compensation systems for asbestos-related illnesses vary greatly from one country to another.

The Australian government has created the National Asbestos Exposure Register to record the details of people who may have been exposed to asbestos.

Europe’s systems are still evolving and recent cases in France and the UK have heightened the attention paid by the public and the insurance industry to the issue.

Internationally, the number of claims related to asbestos illness is increasing, correlating with the rise in the number of reported illnesses, with the US leading the path in the tort explosion.

There should be no question that when it comes to asbestos, expert consultation is a necessity.

Consultation demand is expanding as organisations become increasingly digital and because of a recent rethink in how risk-management systems can be developed to offer seamless and integrated technologically innovative solutions.

Systems must now demonstrate the automation of timely workflow associated with collecting information that is accurate and meets the requirements of the legislation.

The idea of one source of the truth that is accessible to anyone, anywhere at any time, is no longer just a concept.

In a still maturing risk-management systems sector, we are seeing the wave of new entrants offering their “techie wares”, from asset custom QR codes, cloud-based solutions, satellite imaging, advance asbestos detection devices and mobile apps, to finally take compliance auditing into the 21st century.

Ultimately, a universal standard needs to be established to manage hazardous materials where the collection and presentation of this information is in a common format and available to all stakeholders.

Essentially, organisations should strive to be proactive by exploring, employing and improving their risk-management systems and processes.

Maintaining a strong risk-averse culture ensures the organisation not only meets its legal obligations, but also signifies its officers have great leadership and accountability.